Prop 30 and the Price of Gas

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Forget the idea that Prop 30 would simply raise income taxes on “millionaires” (actually anyone who makes over $250,000 a year).

It is the second part… the hike in the state sales tax that could be its downfall.

The increase isn’t that much, says the Governor. California’s sales tax currently at 7.25 percent, would be raised to 7.5 percent. In Los Angeles County, which like others has increased the tax on its own, the rate would climb to 9 percent.

But here’s the rub. The sales tax would not only drive up the cost of everything you buy (except groceries) but also the price of… wait for it….. GAS!

Or would it?

The “No on 30” campaign has purchased ad time equating Prop 30 with an increase in the price of gasoline. A woman in a kitchen laments the impact it would have on her household budget “…a billion dollars a year for gasoline, clothes, things we buy every day.”

But wait! The California legislature in 2010 did away with the sales tax on gasoline. Instead they increased the excise tax on those who produce the gasoline. It would be up to the gasoline supplier to pass the increase in cost on to the motorist (which they do).

It is sort of an indirect tax that gave the state some greater flexibility in how to spend the money.

The state’s independent Legislative Analyst Office said the “No on 30” advertisement was accurate for diesel fuel.. but not gasoline.

But as they say in the infomercials… wait, there’s more!

The 2010 law that removed the sales tax from gasoline was a statute, meaning that it was adopted by the legislature. Proposition 30 is a constitutional amendment which is different.

According to legal counsel for the “No on 30” campaign, the measure is not covered by the 2010 law and therefore will have a direct impact on the price of gasoline. They'll keep running the ads.

Oh… and then there is the other controversy about who is paying for those television spots.

Much of the money comes from a late donation of about 11 million dollars from an Arizona group called “Americans for Responsible Leadership.”

Exactly who they are is sort of un-known. It is believed much of the money comes from David and Charles Koch a pair are libertarian Republicans in the oil industry who have spent millions on conservative campaigns. California Common Cause has asked the state Fair Political Practices Commission to investigate the group. The Governor believes their contribution may be illegal.

“Our attorneys checked them out and they are legitimate” says Joel Fox, of the Small Business Action Committee, which took the donation. “I can’t speak for them but I can speak for us, and everything we have done is legal.”

In the meantime… the pressure is on. The FPPC says it asked the Arizona group for information about its donors. Jerry Brown says he is in full-court-press mode for the final weeks of the campaign… and more and more the push toward election day becomes less important.